207k views
3 votes
Suppose the​ euro/yen exchange rate falls while the​ dollar/yen exchange rate rises. What happens to the price of goods imported into​ Japan?

A. Prices of imported goods increase.
B. Prices of imported goods decrease.
C. Prices of imported goods remain constant.
D. Prices of imported goods depend on other factors.

User Knoefel
by
8.3k points

1 Answer

2 votes

Final answer:

The impact on the price of goods imported into Japan depends on the origin of the imports due to the differing changes in exchange rates between the yen and the euro, and the yen and the dollar. Prices of European imports will likely increase while American imports may become cheaper.

The correct option is d. Prices of imported goods depend on other factors.

Step-by-step explanation:

If the euro/yen exchange rate falls while the dollar/yen exchange rate rises, this indicates that the yen has appreciated against the euro and depreciated against the dollar. For goods imported into Japan, the impact would depend on where the goods are being imported from.

If the goods are coming from the Eurozone, the price will likely increase since the yen now buys fewer euros. On the other hand, if the goods are imported from the United States, the price in yen could decrease because now more dollars can be bought with the yen.

Therefore, the correct option is D. Prices of imported goods depend on other factors, specifically the country of origin of the imports.

User Prakash Thapa
by
8.6k points